Reliance Power, Reliance Industries; Tata Steel; Suzlon Energy; L&T; ICICI Bank; Tata Tele Maharashtra; ITC; Sesa Sterlite; tata Motors; are amongst the top companies with largest shareholder base. Also MNCs like Colgate, Castrol, Bosch, Blue dart, Ingersoll, Siemens, Bata, Whirlpool, IFB, Hitachi home, are few companies with large shareholder base will be difficult to delist from India in case if they want consider it. Shareholder base of these companies spread between about 4 lakh – 30 lakh. These companies will not be in position to do delisting cause of new sebi guidelines which will require minimum 25% of shareholders for successful delisting. Most of these companies will even have shareholders holding shares in physical forms and to reach out to all of them will not be possible. By adding an additional condition of ignoring the shares held by top 10 shareholders for calculating 50% will tantamount to imposing an additional condition which, for most of the companies, may end up increasing the number of shares required for a successful delisting beyond the 90% threshold.

1. Top companies with large shareholder base to find delisting impossible
Overview: Reliance Power, Reliance Industries; Tata Steel; Suzlon Energy; L&T; ICICI Bank; Tata
Tele Maharashtra; ITC; Sesa Sterlite; tata Motors; are amongst the top companies with largest
shareholder base. Also MNCs like Colgate, Castrol, Bosch, Blue dart, Ingersoll, Siemens, Bata,
Whirlpool, IFB, Hitachi home, are few companies with large shareholder base will be difficult to delist
from India in case if they want consider it . Shareholder base of these companies spread between
about 4 lakh – 30 lakh. These companies will not be in position to do delisting cause of new sebi
guidelines which will require minimum 25% of shareholders for successful delisting. Most of these
companies will even have shareholders holding shares in physical forms and to reach out to all of
them will not be possible. By adding an additional condition of ignoring the shares held by top 10
shareholders for calculating 50% will tantamount to imposing an additional condition which, for most
of the companies, may end up increasing the number of shares required for a successful delisting
beyond the 90% threshold.
The story: Media reports suggest that a delisting offer will be considered successful either in case if
Mandatory participation in the reverse book building process by at -least 25% of the number of
shareholders as on the date of the board meeting of the company AND / OR At-least 50% of the
shares excluding the shares by top 10 public shareholders should have been tendered.
Many companies with large market capitalization or the ones which have been listed for a long time,
typically tend to have a large shareholder base. Reliance Power, Reliance Industries; Tata Steel;
Suzlon Energy; L&T; ICICI Bank; Tata Tele Maharashtra; ITC; Sesa Sterlite; Tata Motors; are
amongst the top companies with largest shareholder base.
Also MNCs like Colgate, Castrol, Bosch, Blue dart, Ingersoll, Siemens, Bata, Whirlpool, IFB, Hitachi
home, are few companies with large shareholder base will be difficult to delist from India in case if
they want consider it.
In such cases condition of 25% shareholder participation or similar condition will result in requirement
for participation by a large number of shareholders, which could range from 1 lakh to 7 lakh, which
would be practically impossible, since a large number of the shareholders would be shareholders who
are untraceable/ are unaware of their holdings/ or whose contact details are not updated and who are
not active participants in capital market activities. Further, such companies also have a large number
of shareholders holding shares in physical form and such shareholders are usually inac tive/
untraceable, which will also cause serious hindrances in meeting the 25% threshold proposed.
Given the companies with such large and diverse shareholder base, which spreads spread between
about 4 lakh – 30 lakh, it is unfair to paint all companies with same brush. For many of the companies,
such conditions will effectively close the doors to potential delisting. Even if such conditions are to be
applied, same have to be applied duly taking into account the shareholder base of the company.
The success of the delisting offer shouldn’t be guided by how many number of shareholders
participate, since at the end of the day such high number might actually represent a very small
quantum of share capital of the Target Company. In such a scenario, such public shareholders
knowingly / unknowingly will end up derailing the delisting offer, which otherwise would have been
successful due to the quantum of shares tendered in the offer.
Also needs to be considered another guideline of At-least 50% of the shares excluding the shares by
top 10 public shareholders should have been tendered for successful delisting, The current threshold
of 90% shareholding for successful delisting is already stringent . By adding an additional condition of
ignoring the shares held by top 10 shareholders for calculating 50% will tantamount to imposing an
additional condition which, for most of the companies, may end up increasing the number of shares

2. required for a successful delisting beyond the 90% threshold. This proposal effectively prescribes an
upward revised threshold whereby the 90% shareholding loses its sanctity.
Also, as discussed above, the top 10 shareholders (typically being insurance companies, mutual
funds, etc) manage investments of a large number of unit holders. Accordingly, participation by such
shareholders is in effect participation by a large number of public shareholders and hence it would be
inappropriate to consider them as not representing minority / small shareholders and thereby
disregarding their participation in the delisting offer.
Accordingly, rather than trying to introduce improbable events like participation by a % of public
shareholders (as has also been seen by the recent precedents of delistings), the focus should be to
find ways and methods to reach out to all the public shareholders, make them aware of the offer and
their rights under the Delisting Regulations and assist them in making an informed decision about
whether or not to participate in the delisting offer and if yes at what price. This would in a true sense
be viewed as protecting the interests of the small minority shareholders.